What is the net price?
The net price is an estimate of the actual cost families will pay for their student’s college education expenses annually.
How do you calculate the net price?
The college’s total cost of attendance (COA) (tuition & fees, room, board, books & supplies, transportation, and personal expenses) MINUS gift aid (grants and scholarships) EQUALS the net price.
The college’s COA is available on the college’s website.
Gift aid refers to grants or scholarships awarded to a student based on their financial need or academics (respectively). Please refer to The College Corner Sentinel article dated September 14, 2023, “How Does College Financial Aid Work?” for a more in-depth understanding of the financial aid process.
Grants can be awarded by the federal government, state government, or college in a typical college financial aid package. Grants may be awarded if the student demonstrates financial need as determined by the Free Application for Federal Student Aid (FAFSA).
Recall from the September 14 article that the FAFSA’s formula calculates the Student Aid Index (SAI). The SAI determines eligibility for need-based grants (and loans) in financial aid packages. The lower the SAI, the greater the eligibility for need-based grants. A standard rule of thumb that I use is: If your SAI is greater than the cost of a college, it is unlikely your student will receive a need-based award. In this case, the federal government and college assume your family can pay a higher portion of the cost.
Note that the FAFSA SAI is generally the same at each college. However, the student’s financial need amount can vary depending on the college’s cost of attendance.
How can I determine the estimated cost of a college for my student?
- Estimate your student’s SAI. Consider using a financial aid calculator to estimate your SAI.
Calculators that use the new FAFSA formula, which will be launched on December 31, 2023, include:https://mycollegecorner.com/calculator/financial-aid-calculator/
https://studentaid.gov/aid-estimator/ - Estimate your student’s merit scholarships. Merit scholarships consider GPA, test scores, college major, extracurriculars, and talent in music, art, or athletics. Estimating your student’s scholarships can be challenging, but below are some resources and tips to help:
- Visit a college’s website and look for published scholarship information on a scholarship web page or grid.
- Complete the Net Price Calculator (NPC) on a college’s website to estimate your expected contribution and merit scholarships. The NPC may also estimate federal and institutional (college) grants.
- Some education consultants maintain a database of scholarships based on the college name, GPA, and test scores.
- Do not include loans when estimating the net price. While loans may appear in the Net Price Calculator, your estimated net price should only include free forms of financial aid (grants and scholarships).
Last week, I closed my article with the following statement:
It is crucial to consider financial fit during the college search process; disregarding it could be detrimental to both you and your student.
For those families just beginning the college search process, be sure to consider financial fit.
For those families whose students will soon be receiving admission decisions, consider making a final decision after your student has received all or most of their financial packages from their colleges. This will allow you to make a wise financial decision.
Need help understanding college costs, the financial aid process, or your financial aid packages? Consider contacting me.
Sentinel Article November 23, 2023